Bridewater Associates Co-Chief Investment Officer Greg Jensen says the U.S. economy will be “significantly weaker, near-recession-level growth” for 2019.

Bridgewater is the largest hedge fund in the world and it is anticipating GDP growth close to 1 percent in 2019 and even lower for the rest of the developed world. The U.S. economy grew at a 3.4 percent clip during quarter three, down from 4.2 percent in the second quarter, and the Commerce Department said Friday it is expected to continue to slow in the fourth quarter .

Other economists believe the fourth-quarter GDP will be around 2.5 percent, so Jensen’s low prediction is striking.

Per Reuters:

“The biggest theme developing is that you are going to have significantly weaker growth, near-recession-level growth in 2019, based on our measures, and the markets are generally not pricing that in,” said Jensen, who helps oversee more than $160 billion in assets.

“Although the movement has been in that direction, the degree of it is still small relative to what we are seeing in terms of the shifts in likely economic conditions. And so, we think that’s going to be the big story going forward, weaker growth and central banks struggling to move from their current tightening stance to easing and finding it difficult to ease because they have very little ammunition to ease.”

Jensen noted growing political tensions around the world and said “a cyclical downturn will just heighten those tensions and worsen de-globalization.”

Investors have been bracing for a downturn as a massive sell-off began in October. The Nasdaq sank closer to an official bear market, finishing just short of 20 percent lower than its record high in August. The S&P 500 is down more than 10 percent in December alone and is on track for it’s worst month since the record bull market began a decade ago.

Jensen said, “The picture for profits is even more significantly bearish, so we think growth will slow and profits will slow significantly more than growth will slow.”

Jensen said that while U.S. equities in general are still highly priced relative to the likely changing conditions, “across the world there’s some equity markets that aren’t pricing in very much growth and on a relative basis are more attractive.” Bridgewater has relative positions in Emerging Markets, Jensen said.

“Our views are a result of a systemized process that we have built over 40 years of trading and studying markets and economies,” Jensen said.

Because the financial system is not as levered as it was, Bridgewater does not expect a financial crisis such as the one experienced in 2008, he said. “We think a much more gradual grind that gets market prices in line is more likely in a very slow economy that is difficult to stimulate. So a long dragged-out, slow condition,” Jensen said.

“We are bearish on equities but it’s a part of a diversified set of conditions across asset classes. That process has allowed us to have our alpha be uncorrelated over time to equity markets,” Jensen said. “We do equally well as equity markets go up or equity markets go down. So, we are having a normal year this year – as good as our typical year – and that is a function of the design of our alpha … we don’t have any tendency to be long any particular asset.”